Today Nova Scotia Finance Minister Maureen
MacDonald delivered
the province’s 2013 budget.The budget is balanced, and projects
surpluses of $16.4 million in 2013-14, $18.3 million in 2014-15, $19.4
million in 2015-16 and $21.9 million in 2016-17. The budget reduces the small
business income tax rate for 2014, lowers the small business limit threshold
and confirms its promise to lower the province’s Harmonized Sales Tax (HST)
rate beginning in 2014, among other corporate and personal tax changes.

Highlights of tax measures announced
in today’s budget are summarized below.

Business Tax Changes

Small
business income tax rate

The budget says
the government will reduce the small business corporate income tax rate to
3.0% (from 3.5%), effective January 1, 2014. The small business income
threshold will also decrease to $350,000 (from $400,000).

As a result, Nova Scotia's
corporate income tax rates effective January 1, 2013 will be as follows:

Corporate
Income Tax Rates – As of January 1, 2013

Nova Scotia

Combined Federal
and Nova Scotia

General

M&P

Small business1

16.0%

16.0%

3.5%

31.0%

31.0%

14.5%

1.Nova Scotia’s small
business rate will decrease to 3.0% (from 3.5%) effective January 1, 2014.
The small business limit threshold will also decrease to $350,000 (from
$400,000).

Indirect Tax Changes

Harmonized
Sales Tax changes

The budget confirms
that the province’s Harmonized Sales Tax (HST) will be reduced to 14% (from
15%) in 2014, with a further reduction to 13% in 2015. This change will bring
Nova Scotia’s HST rate back to the same level it was in 2010.

Personal Tax Changes

Personal income tax
rates

No changes to the personal income
tax rates were announced. As a result, Nova Scotia's combined top marginal
tax rates remain as follows:

Personal Income
Tax Rates – As of January 1, 2013

Combined Top
Marginal
Tax Rates for 20131

Interest
and regular income

50.00%

Capital gains

25.00%

Eligible dividends

36.06%

Non-eligible dividends

36.21%

1.The
budget announced that it will maintain its highest income tax bracket

of 21% ( 50%
combined federal and Nova Scotia) on income of $ 150,000

or more, even though
this bracket was scheduled to be removed once the budget was balanced.

Other Tax Measures

Digital
media and film industry tax credits

The Digital Media
Tax Credit, previously set to expire at the end of 2012, will be extended to
December 31, 2013. This is a refundable tax credit for costs directly
related to the development of interactive digital media products. Total
potential tax credits available on qualifying expenditures can be as much as
60% depending upon the geographic area.

The budget also
confirms the Province’s continued support for the Film Industry Tax Credit
which also provides potential tax credits of up to 65% for film productions
in Nova Scotia.

Tobacco tax

The budget increases the tax rate on cigarettes by 2 cents per
cigarette or gram of fine-cut tobacco, effective April 5, 2013.

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